01.Virgin Money fined for misleading ads
Virgin Money (Australia) has paid three fines totaling $30,600 after the Australian Securities and Investments Commission (ASIC) issued the company with infringement notices for misleading online and television advertising for its so-called "Quick & Easy" life insurance.
ASIC says consumers were misled about the process involved in applying for the life insurance policy and the cover provided.
According to ASIC, Virgin Money's advertising stated that "no health or lifestyle questions" would be asked. But the application form did ask such questions, including about smoking status. Responses were then used to calculate life insurance premiums.
The ads also stated that the weight of the person applying for the insurance would not be a factor affecting the coverage of the product, but in fact weight could be a relevant factor in determining coverage offered under Quick & Easy policy.
The misleading life insurance advertisements appeared on television until May 2013, and online until March 2014.
"Purchasing life insurance is an important decision and consumers should be able to confidently rely on representations made to them in advertising," said ASIC Deputy Chairman Peter Kell.
Superannuation through your life insurer may be a better option
CHOICE has found that life insurance products directly promoted to consumers can be the most expensive way to insure. The latest CHOICE life insurance review found life insurance with your super fund costs less compared with life insurance offered by financial advisers or your bank.
Life insurance tips
- A simple way to estimate how much life insurance cover you need is to take your annual salary and multiply it by 10.
- If you have superannuation, it usually has some life insurance added unless you’ve actually specified that you don’t want the cover.
- If you have life insurance with your super fund, the life insurance payout will be paid to the super fund trustee, not your estate. To ensure your wishes are followed, you must make a “binding nomination”, lodge it with your fund and update it every three years, otherwise it will be up to the trustee to decide how the money is distributed. This can get tricky if you have complicated family circumstances.